Press Release: OJK`s Performance for First Quarter of 2014

Financial
Services Authority, Jakarta June 23rd, 2014: Financial Services Authority (OJK) has been
established since January 1st, 2013 pursuant to the mandate of Law
No. 21 of 2011 on OJK. Some of OJK`s work performance in supervising and
regulating the fields of capital market, non-bank financial industry, banking,
and education and consumer protection are, among others:

Financial
sector in Indonesia showed a positive development. In government bond market,
the government bond yield for Q1 2014 recorded a decrease of 42 basis points in
average. This growth was accompanied with low volatility, reflecting a well
maintained stability despite the fact that a transfer of regulatory and
supervisory function has taken place from Bank Indonesia to OJK at the
beginning of this year.
In
capital market, Indonesian composite index increased by 11.6% with a closing at
4,768.28. Net buy by foreign investors throughout Q1-2014 amounted to Rp24.6
trillion. Stock market capitalization rate also increased by 11.8% compared to
previous quarter. Daily average trade value decreased by 4.6%, but daily
average stock trading frequency increased by 38.7%.

Performance
of non-bank financial industry during Q1 2014 generally showed a positive
progress. Total assets of non-bank financial industry in the end of Q1 2014
increased by around 2.9% compared to previous quarter. Financial services
sectors in the coverage of non-bank financial industry that experienced
performance escalation were pension fund, finance institutions and other
financial services institutions. In term of assets, insurance was the industry
with the biggest assets, followed by finance institutions, pension fund, other
financial services institutions, and supporting services industry in non-bank
financial industry. In term of number of practitioners, financing industry had
the biggest number, followed by pension fund, supporting services industry in
non-bank financial industry, and insurance.
Banking
industry had a tight liquidity condition. However, capital adequacy ratio (CAR)
showed a quite good performance, which was at 19.8%. Gross non-performing loan
(NPL) ratio was relatively low at 1.9% in average, with net NPL ratio at 0.9%.
Performance of Sharia banking industry experienced a slow down compared to
previous quarter, but Sharia banking market share increased by 4.9%.OJK
continually put efforts into implementing its main function and duties in order
to ensure that financial system stability is well maintained. OJK has set 10 strategic
targets that encompass: (i) to realize financial services sector that is tough,
contributive, and inclusive; to secure a stable and sustainable financial
system, and to protect the interests of consumers and society, (ii) to improve
regulation on financial services sector that is aligned and integrated, (iii) to
develop a stable and sustainable financial services sector, (iv) to optimize an
effectively integrated and coordinated supervision over financial services
sector, (v) to optimize education and consumer protection, (vi) to improve
surveillance over financial system and effective coordination, (vii) To improve
effective management, (viii) to optimize accountable financial management, (ix)
to develop an efficient and effective organization that is supported by professional
human resources, and (x) to develop information system as well as sufficient
facilities and infrastructures. These strategic targets are guidelines for OJK
to implement its duties. Information system technology is continually developed
so that existing supervision system over financial services sector can be well
integrated.

In
a bid to achieve the goal of realizing a healthy, sustainable and stable
financial system, OJK has the interest to build communications and effective
coordination with various domestic and international institutions. Some
established cooperation involve National Sharia Board - Indonesian Ulema
Council (DSN MUI), State Ministry for Development of Disadvantaged Regions
(KPDT), National Intelligence Agency (BIN), National Population and Family
Planning Agency (BKKBN), Agency for the Placement and Protection
of Indonesian Migrant Workers (BNP2TKI), and some universities in the
framework of consumer protection. In efforts to develop microfinance
institutions, OJK also cooperated with Indonesia Sharia Insurance
Association (AASI), and Deutsche
Gesellscaft fur Internationale Zusammenarbeit (GIZ).
At multilateral level, OJK is now listed as
member of Working Group on Banking
Supervision (WG/BS) in Executive
Meeting of East Asia Pacific Central Banks (EMEAP), which comprises 11
central banks and banking supervisory authorities (Non Central Bank Supervision/NCBS) in Asia Pacific region. OJK
is also a full member of Islamic
Financial Services Board (IFSB). In January 2014, OJK was officially
accepted as the 100th signatory to sign the Multilateral Memorandum of Understanding on Concerning Consultation and
Cooperation and the Exchange of Information (MMoU) IOSCO. At regional level,
OJK continually involves and actively roles in the continuance of ASEAN Capital
Market Forum (ACMF) initiative.

Pursuant to the mandate of Law No. 21 of
2011 on OJK, as of December 31st, 2013, the regulatory and
supervisory function has been transferred from Bank Indonesia to OJK.

In
order to implement the mandate, to carry out regulatory and supervisory
function over banking, capital market, non-bank financial industry, and to
perform the duty on education and consumer protection, OJK has since early in
January 2014 opened 35 offices, which comprise 6 OJK regional offices and 29
OJK offices throughout regions in Indonesia. All those offices are located at
Bank Indonesia regional offices.

In
line with the implementation of duty on consumer education, OJK is also
mandated to implement consumer protection so that OJK offices in regional areas
can function as centers of information and complaint. It is expected that
through improvement in financial literacy the society can become more convinced
in making investment decision and in relating with financial institutions.

In accordance with Law Number 1 of 2013 on microfinance institutions, OJK is
given mandate to foster, regulate and supervise microfinance institutions
starting in 2015. In the framework of fostering, regulating and supervising
microfinance institutions, OJK builds close coordination with regional
government, Ministry of Home Affairs, and State Ministry for Cooperatives and
Small and Medium Enterprises.

Additionally,
in order to implement duties in regional areas, OJK is actively initiate
cooperation with regional government, Bank Indonesia and components of society.